Nauru is completely without fresh food tonight and its electricity and fresh water supplies are under threat. A vessel carrying supplies for the tiny island nation is refusing to unload its cargo because of the Nauruan Government's unpaid shipping bills.

---------Compere: Tony JonesReporter: Evan Williams

Nauru is completely without fresh food tonight and its electricity and fresh water supplies are under threat.

A vessel carrying supplies for the tiny island nation is refusing to unload its cargo because of the Nauruan Government's unpaid shipping bills.

'Foreign Correspondent's Evan Williams has the story.

EVAN WILLIAMS: When Nauru's President Rene Harris agreed to take the 'Tampa' asylum seekers, he bailed John Howard out of an embarrassing bind.

But at the time, it was revealed that President Harris had accrued personal bills worth $230,000 while in charge of Nauru's phosphate corporation, the island's only money-maker and taken out massive personal bank loans.

What's your response to that?

RENE HARRIS, PRESIDENT OF NAURU: I'm not aware of misappropriating that amount of money, no, I'm not.

EVAN WILLIAMS: President Harris denied the charges but then said he had paid all the money back, despite providing no proof.

It was into this environment the 'Tampa's human cargo was delivered, some even under armed guard.

They cheat us!

Australia agreed to pay Nauru $20 million to take care of the asylum seekers and help clear some of the tiny nation's massive debts, run up after years of corruption and mismanagement.

While some supplies were initially flown in, Canberra would also pay to ship most food and fuel the hundreds of kilometres from Brisbane to Nauru, one of the most remote island nations on earth, which, with one aircraft, relies on a monthly shipping service for all its food, fuel and essentials.

Food for the Nauruans, and now the asylum seekers, is meant to arrive on this ship, 'The Captain Fern', but for the past four weeks, 'The Captain Fern' has been drifting and ordered not to off-load because the Nauruan Government owes the shipping company $600,000.

Lateline has obtained letters from the shipping company, pleading with the Nauruan Government to pay its bills, and when President Rene Harris finally did send a Nauru Phosphate Company cheque, it bounced.

Despite repeated pleas for payment, tonight the ship still has not been off-loaded.

Nauru has now completely run out of all fresh foods, flour, sugar and most importantly, its staple -- rice.

The ship also has thousands of litres of lubricating oil needed to keep the island's power generators going, vital not just for electricity but also the only desalination plant, the only source of fresh water for Nauruans and the asylum seekers.

The standoff has forced aid agencies to instead schedule six extra freight flights from Brisbane at a cost of up to $500,000, paid for by the Australian taxpayer, just to feed the asylum seekers and keep the generators going for their water.

Nauruans meanwhile, have been going hungry, sparking concerns among aid agencies that the goodwill so far shown towards the asylum seekers could soon fade.